Outsourcing HR responsibilities can save small and mid-sized businesses a large amount of money. By shifting some administrative duties to a Professional Employer Organization (PEO), your business can reduce your costs and increase the time your team can spend on revenue-generating tasks.
When your HR team can focus on generating revenue or helping with complex strategic initiatives, your business has the chance to grow faster and generate more income than would otherwise be possible. In fact, companies that use a PEO see an average ROI of over 27%.
By partnering with a PEO, your company can set the stage for success. That starts with providing your team with better benefits at a reduced cost.
Without a doubt, a large cost savings a company sees when partnering with a PEO is in the cost of benefits such as healthcare. Having a relationship with a PEO gives your business the chance to offer your employees Fortune 500 benefits at a Fortune 500 price.
A PEO can do this by pre-negotiating the cost of benefits. Insurance companies look to minimize their risk by having a large pool of low-risk individuals. As a small business, you have little leverage with insurance companies — they take on more risk the fewer employees you have. By partnering with a PEO, you can group together your employees with the other small businesses the PEO represents which creates a large risk pool. This is how the PEO can provide top-notch benefits at lower costs, passing those cost savings onto your business.
Avoid Regulatory Fines
HR regulations and labor laws are constantly changing. Your business needs someone who not only knows the current laws but also someone who keeps up with the changes in regulations. Otherwise, your company exposes itself to the possibility of hefty legal fines. Using a PEO gives you the peace of mind you deserve, knowing full well that your company's compliance concerns are under control.
Payroll errors can also cause great stress as well as legal ramifications. Missing a paycheck could be extremely detrimental to an employee, and any errors in processing could mean your company faces severe consequences.
If your company has misclassified employees or not paid overtime when it was due, the federal government is quick to levy substantial fines. Using a PEO gives you access to expert payroll processing and analysis to help you avoid fines and keep your corporate assets for reinvestment into your business.
With few exceptions, the law requires every business to carry workers' compensation insurance. This coverage helps to cover employee's medical bills and lost wages if they suffer an injury on the job.
But many small businesses have trouble affording workers' compensation insurance on their own when the carrier requires they pay a substantial down payment to get coverage. Since the PEO pays the deposit, your company benefits with a pay-as-you-go workers' compensation plan. Accessing the PEO’s workers comp insurance means more than just forgoing a deposit; you also gain access to their e-mod and premium rates, leading to further cost savings.
Scale Up Without More Hiring
With each new hire brings a great deal of more cost. You or a manager must spend time training the new person, further impacting your business's bottom line by taking you away from your duties. But hiring is a good sign of growth.
There's another sign of positive growth in a business — partnering with a trusted PEO. Your chosen PEO can alleviate some burden on you or your existing HR team. A PEO will complement your HR team by taking the mundane administrative tasks off their plate, allowing them the opportunity to focus on bigger projects, creating employee engagement programs, and increasing the overall satisfaction of your employees.
The Right PEO Helps Your Business Succeed
The right PEO can help your business thrive. They do this by reducing administrative burdens, minimizing the risk to your business, and ensuring your employees have access to Fortune 500 level benefits.
The best way to maximize these cost savings is to work with not just any PEO, but a local PEO. Many small businesses think they can get by with a payroll provider who can run their payroll and help to minimize mistakes. Ultimately, working with a local PEO costs your business the same amount of money and you get access to many more benefits:
- Medical, dental, and vision coverage
- Benefits administration
- PTO administration
- Payroll and tax services
- Compliance coverage
- Handbook and policy help
It's time to set your business apart and start seeing rapid growth. Partnering with a local PEO is the first step.